Healthcare Newsletter

Employment Contracting - Ensuring Easy Out?

I am hiring a new doctor for my practice and considering what to include in my employment agreement with him. I do not want either of us to be fully locked in if this doesn’t work out. How would you recommend ensuring that we can both get out easily if it’s not a good fit?

Dr. R

Answer:

Dear Dr. R

It seems that you are referencing the use of a “without cause” termination provision, which is an important but often overlooked part of employment agreements. The doctor may not be doing anything wrong to justify being fired for “cause” under your agreement, but you may think he’s not a good fit for your practice or your patients may not be receptive to his bedside manner. In the alternative, he may regret the move and miss his old employment or old neighborhood and want out of the arrangement. A without cause provision ensures that both parties may end this arrangement for any reason or no reason at all.

However, there are some things that you may want to consider including to protect the practice. By way of example, below are four concepts that you may wish to include in a without cause provision:

1. Make sure you have a notice provision so that you have adequate time to find a replacement should the doctor decide to terminate. You do not want to be in a situation where the doctor walks out and you have patients lined up for weeks without enough coverage.

2. You may decide that you do not want this person in the office at all, not even for the notice period. In order to prepare for this situation, I recommend having a provision that provides the practice with the option to offer severance (a set amount of compensation) in exchange for not having to provide the doctor notice.

3. In order to give the practice even more discretion, you could incorporate a probationary period during which the practice may terminate the doctor’s employment without cause and without notice during an initial period of employment.

4. The agreement may also include liquidated damages (a set payment amount the doctor owes to the practice for each day of inadequate notice) should the physician not provide the required notice. This is utilized in order to ensure that the practice receives a set amount of compensation for the practice’s anticipated loss of business due to the likely inability to replace the physician immediately.